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R E V : S E P T E M B E R 2 1 , 2 0 2 2
J E F F R E Y F . R A Y P O R T
S P E N C E R R A S C O F F
S U S I E L . M A
TripAdvisor: An Itinerary for Growth
TripAdvisor CEO Steve Kaufer was in his Needham, Massachusetts, office in November 2019,
reviewing notes for his upcoming quarterly earnings call with investors. Third-quarter revenues were
down 7%, due in part to a 12% decrease in revenues from the company’s Hotels segment (see Exhibit
1 for 2019 revenues by segment).1 Even though the newer verticals, Experiences and Dining, were
growing at 19% over the comparable period the previous year, they had been forecasted to grow even
faster. For nearly 20 years, Kaufer had steered TripAdvisor to growth as well as profitability, but the
pace of expansion had started to slow. In 2018, TripAdvisor’s revenues totaled $1.6 billion, up 4% from
2017, driven by Experiences and Dining, which included bookable travel activities and dining
reservations (see Exhibit 2 for the company’s income statement and Exhibit 3 for revenues by
segment). However, income from the Hotels segment, which generated a majority of the company’s
revenue when users clicked on links to third-party travel sites, had been flat since 2015.
When Kaufer co-founded TripAdvisor in 2000, he set out to create a platform for sharing travel
information. But he had not imagined that it would grow into one of the most used and trusted travel
websites in the world, with 830 million traveler reviews opining on 2.3 million accommodations, 5
million restaurants listings, and 1.1 million travel experiences.2 Every month, 460 million people visited
TripAdvisor’s website or one of its 25 portfolio brands.3 TripAdvisor offered travelers the ability to
research hotels, flights, and rental cars. Users could also discover and book travel experiences, vacation
properties, and restaurants. TripAdvisor consistently ranked as one of the most popular travel brands
on the Internet (see Exhibit 4 for a ranking of travel websites). It was a public company with a market
cap of $5.6 billion in November 2019.4 TripAdvisor had 3,300 employees at year-end 2018.5
TripAdvisor made money from each user who clicked on links to online travel agents (OTAs), such
as Expedia and Travelocity, and direct suppliers, such as Marriott, Hilton, and Hyatt Hotels. But
shifting dynamics in the travel services space were presenting challenges to TripAdvisor’s business
model. First, OTAs and hotel companies were competing more aggressively to pull prospective
travelers directly to their sites, which meant bypassing intermediaries such as TripAdvisor. Second,
user traffic from Google’s organic search results—on which TripAdvisor had relied for many years,
using search engine optimization (SEO) to drive performance—was declining, because Google was
pointing users directly to its growing suite of proprietary travel tools and products. Finally,
TripAdvisor found itself competing with Google— its major supplier of traffic—for advertising dollars,
Senior Lecturer Jeffrey F. Rayport, Spencer Rascoff (Visiting Executive), and Case Researcher Susie L. Ma (Case Research & Writing Group)
prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was
provided by Harvard Business School and not by the company. Spencer Rascoff serves as a director on the board of TripAdvisor. HBS cases are
developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of
effective or ineffective management.
Copyright © 2019, 2022 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-
7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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because Google’s travel products, particularly its hotel finder, offered an alternate sales channel for
OTAs and direct suppliers, who were TripAdvisor’s core customers (i.e., advertisers). In May 2019,
Google became a more acute competitive threat when it consolidated its travel products into a one-
stop shop, where users could research travel options, read reviews, engage in price comparisons, and
book travel directly using Google, or click through from Google directly to an OTA or supplier site. In
other words, Google was positioning its travel products suite as a substitute for other intermediaries,
of which TripAdvisor was the industry’s market share leader. Taken together, these trends had hurt
TripAdvisor’s growth. As Kaufer put it, “We’re in the middle getting squeezed from both sides.”
Still, TripAdvisor estimated the global travel market to be worth $1.7 trillion, with online
penetration at 50% and still climbing.6 Kaufer believed there was plenty of room for all players in the
online travel market to grow. He wanted to reposition TripAdvisor by revitalizing its value proposition
and products, leveraging its brand recognition and user loyalty. To this end, in January 2018, he created
a new team called Core Experience (CoreX) to coordinate TripAdvisor’s branding and to create a
coherent product strategy across its business units. Could Kaufer and his executive team reposition
TripAdvisor in time to overcome the Google threat and reinvigorate growth?
The Travel Services Industry
The modern travel services industry was born in 1841 when Englishman Thomas Cook arranged
special train transport for 540 members of a temperance society (a group opposed to the consumption
of alcohol) to a meeting, for which Cook received a commission—becoming the first travel agent.a,7
Since then, travel agents had provided an array of services, including arranging transportation and
accommodations, coordinating tours, and offering expert advice on destinations. As commercial air
travel became more accessible in the mid-20th century, travel agents played an important role for both
consumers and airlines—helping travelers navigate complex flight combinations and acting as a sales
channel for airlines.8 Of course, travelers also had the option of booking a flight or hotel room by
contacting a supplier directly, usually by phone, allowing them to bypass agent fees.
The rising popularity of international travel in the 1950s meant that travelers sought information to
help navigate unfamiliar foreign destinations. This led to a proliferation of travel guidebooks, such as
Fodor’s and Frommer’s, which contained enticing descriptions of sites to visit, what to do there, and
where to stay.9 Publications such as the MICHELIN Guide and Zagat (later acquired by Google)
became known for restaurant information.
Towards the end of the 20th century, consumers could act as their own travel agents as the Internet
made travel planning easier and more accessible. In 1995, the site Preview Travel launched, offering
the ability to book airline flights and travel packages online, followed in 1996 by OTAs Expedia and
Travelocity, which allowed users to browse and book a selection of flights, hotels, and rental cars.10 In
1998, Priceline began offering flights and then hotels and rental cars on a name-your-own-price basis,
drawing consumers looking for discounts.11 In 2000, Sidestep became the first travel metasearch engine
that aggregated hotel and flight information from multiple suppliers and OTAs on one site, giving
consumers an opportunity to compare prices across Internet sites and then redirecting users to relevant
sites to complete a booking.12 Airlines also began appealing directly to consumers, encouraging them
to disintermediate travel agents and OTAs by direct-booking so-called “e-fares” or “web fares” on their
a
The travel firm Cook founded, called Thomas Cook, abruptly ceased operations and declared bankruptcy on September 23,
2019, leaving 600,000 travelers stranded around the world.
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own sites.13 Hotels followed suit with their own “best rate guarantees” for direct bookings on their
sites, increasing the incentive to bypass OTAs for better pricing and terms.
Travelers became accustomed to using the Internet for travel research, which included reading user
reviews. Amazon pioneered the placement of user or social reviews on its product listing pages in 1995.
TripAdvisor adopted the practice for hotels in 2001, and it became a pioneer in user-generated content
three years before the popular review site Yelp was founded.14
As Internet usage increased, the number of traditional travel agents in the U.S. declined from
124,000 in 2000 to 74,000 in 2014.15 Offline travel agents evolved and focused their offerings on more
complex travel arrangements; their total number had rebounded to 81,000 by 2016.16
Company Background
Frustrated by a lack of unbiased travel-related content online, Kaufer co-founded TripAdvisor in
February 2000. He populated the site by aggregating information from guidebooks, newspaper articles,
and blogs.17 The initial model was for a business-to-business (B2B) venture, which aimed to build a
travel information database and white label it for OTAs. When that proved unsuccessful, Kaufer
pivoted to a business-to-consumer (B2C) approach in 2001, enabling consumers to post their own
reviews and learn from one another.18 (See Exhibit 5 for company timeline.)
In 2002, TripAdvisor became profitable when it began charging partner OTAs and suppliers on a
cost-per-click (CPC) basis, which meant that TripAdvisor was paid each time a user clicked through to
a partner site. In April 2004, Kaufer sold the company to InterActiveCorp (IAC), which owned Expedia
at the time, for $210 million, but under IAC ownership TripAdvisor continued to operate
independently, and Kaufer stayed on as CEO. TripAdvisor hit one million user reviews in 2005. That
year IAC spun off a number of its travel-related assets, including TripAdvisor, into a publicly-traded
company under Expedia.19
Expedia invested in growing TripAdvisor. The company’s workforce increased from fewer than 50
people in 2004 to more than 400 people in 2008.20 As it expanded, TripAdvisor began acquiring online
travel ventures in an effort to expand its content, search capabilities, and deal offers. In 2007, it acquired
Cruise Critic, a community for cruise information and reviews; SmarterTravel, a travel deals site; and
SeatGuru, a resource for airline seat arrangements.21 In 2008, TripAdvisor bought FlipKey, a vacation
rentals site that had 50,000 U.S. listings at the time, and TripAdvisor began building its vacation rental
vertical.22
TripAdvisor built a reputation for unbiased travel reviews, and, by 2010, the company hosted a
cumulative 40 million consumer reviews; it had 35 million unique monthly visitors; and it operated in
26 countries in 16 languages.23 In 2010, TripAdvisor accounted for 15% of Expedia’s revenue and 35%
of its operating income.24 In December 2011, Expedia spun off TripAdvisor, and the latter began
trading as an independent public company on the NASDAQ (see Exhibit 6 for stock chart).25 The one-
for-two reverse stock split gave Expedia shareholders one share of TripAdvisor stock and one share of
Expedia stock for every two shares of Expedia that they owned. One year after the split, Expedia’s
market cap had doubled to around $8 billion, while TripAdvisor was worth more than $5 billion.26 In
2012, media giant Liberty Interactive accumulated voting control of TripAdvisor when it purchased
shares from IAC Founder and Expedia Chairman Barry Diller and The Diller-von Furstenberg Family
Foundation.27
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In 2014, TripAdvisor sought additional expansion opportunities. Kaufer saw that traffic was
flowing liberally to the site’s restaurants and attractions listings, which offered reviews but no booking
functionality. In order to monetize that traffic, TripAdvisor kick-started two new business verticals
through acquisitions. It integrated a European restaurant reservations business with its acquisition of
LaFourchette—a Paris-based restaurant bookings business—for a reported but unconfirmed $140
million in May 2014.28 (The site operated under the name Eltenedor in Spain.) Founded in 2007,
LaFourchette had raised $15 million in venture capital funding.29
In August 2014, TripAdvisor purchased Viator—a platform for travelers seeking to book third-party
tours, activities, and attractions online—for $200 million. Based in San Francisco, Viator had raised $16
million in venture capital funding since its founding in 1995.30
Travel Booking Ecosystem
The online travel services ecosystem consisted of direct suppliers (e.g., airlines and hospitality
operators), OTAs, metasearch engines (e.g., Kayak and Trivago), and peer-to-peer platforms (e.g.,
Airbnb). Search engines such as Google and Bing also played an outsize role as drivers of online traffic.
Travel companies spent advertising dollars on search engines as well as on social media sites such as
Facebook and Instagram. But the key players—search engines and travel sites—had a complex
relationship; they competed with each other for travelers, but they also relied on each other for traffic
and revenues. Kanika Soni, TripAdvisor’s president of Hotels, described the relationship: “There is a
high degree of coopetition in the travel industry. We all depend on each other for traffic, but we also
compete for traveler mindshare and spend.”
Suppliers such as hotels and airlines sold their products directly to consumers through their own
websites as well as through online sales channels, including OTAs (see Exhibit 7 for Booking’s income
statement). Suppliers paid OTAs a commission of 10% to 30% for leads that converted to purchases.31
OTAs were dominated by Expedia Group (Expedia) and Booking Holdings (Booking); the
companies accounted for 80% of all OTA bookings in the U.S. (See Exhibit 8 and Exhibit 9 for travel
brands owned by Expedia and Booking.) 32 On their sites, travelers could comparison shop and book
flights, accommodations, and rental cars, sometimes for less than booking directly through a supplier
such as a hospitality operator (see Exhibit 10 for Marriott income statement).
Metasearch engines aggregated hotel and flight information from suppliers and OTAs, allowing
consumers to compare rates for the same hotel across sites. Each time a user clicked through a link to
a partner site, the partner site paid the CPC rate to the metasearch engine.
Metasearch engines and OTAs relied on Google for traffic, boosting organic traffic through SEO as
well as paid traffic through search engine marketing (SEM). Google, in turn, relied on OTAs,
metasearch engines, and travel suppliers for ad revenue. In 2018, Booking and Expedia together spent
$10.6 billion on SEM, with the majority of those dollars going to Google.33 In 2018, TripAdvisor spent
$544 million on advertising, most of it for SEM on Google, with lesser investments in television to
promote brand awareness.34
TripAdvisor’s Business Model
TripAdvisor was well-known for its wealth of user reviews of hotels and other businesses related
to travel. One analyst noted that TripAdvisor defined the travel review category, saying, “TripAdvisor
is to travel reviews what Kleenex is to facial tissue.”35 The system relied on users’ integrity: users with
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knowledge of a given provider presumably wrote reviews, and users who were planning travel valued
those reviews as an unbiased alternative to marketing campaigns. Businesses caught on to the influence
of user reviews and started utilizing TripAdvisor for reputation management. In 2007, the company
began offering businesses window stickers with the TripAdvisor logo, which served as a badge of
approval, and became ubiquitous in many tourist destinations. An internal study showed that travelers
were 82% more likely to patronize a business with a TripAdvisor sticker in the window.36
The TripAdvisor website also had a robust forum section, where users could exchange information
on topics ranging from “Flying with my ‘pit bull-type’ dog to Paris” to “Kenya vaccine and antimalarial
pills advice.” The forums were free to use and had an active user base. Lindsay Nelson, president of
CoreX, noted: “The forums are a huge traffic driver for us. There is something magical about them and
so much generosity in the forum community with people helping other people.”
Consumers used TripAdvisor free of charge. To write a review, post in a forum, or complete a
transaction, users were required to be members. Membership was also free. To create a member
account, a user submitted basic information including an email address, password, and home city.
Members could also log in through a Facebook or Google account. Members were encouraged to share
information about their travel preferences and favorite destinations. Committing to membership was
an important signal of user engagement with the site. In 2019, TripAdvisor had more than 150 million
engaged members and added 200,000 more each day. Members were five times more likely to visit
TripAdvisor directly; they also generated five times more revenue than non-members, primarily by
viewing more pages on the site and thus creating more inventory for online advertising.
The company split its products into three main categories for revenue reporting purposes: Hotels,
Media & Platform; Experiences & Dining; and Other, which comprised vacation rentals, flights, cruises,
car rentals and other lines of business that did not constitute a reportable segment.
Hotels, Media & Platform
OTAs and suppliers paying CPC rates provided the bulk of TripAdvisor’s revenues. An auction
among participating partners, in which each partner set a maximum amount that it was willing to pay
for a click, determined CPC rates. The company also had two B2B products for hotels: a listing service
and sponsored placements. Businesses could choose from one of three listing options—basic, standard
access, and preferred. A basic business listing was free and included an address and photos, but lacked
contact information for the business. Standard access and preferred listings gave a business greater
visibility within search results and also included multiple contact details, the ability to create special
offers for travelers or feature a favorite review, and access to data analytics (see Exhibit 11 for
comparison of basic and enhanced business listings). Businesses paid a flat subscription fee for the paid
listings on a monthly basis. Sponsored placements gave businesses a spot at the top of a TripAdvisor
search engine results page and on competitor listing pages (see Exhibit 12 for an example of a
sponsored placement). Businesses only paid for the sponsor placement if a user clicked through on the
ad to their business listing page. CPC rates ranged from five cents to several dollars per click.
TripAdvisor also offered display-based advertising that appeared across the top of a page or along the
sides, and sold it on a standard cost-per-thousand-impressions or CPM basis.
In the Hotels category, the ability to compare prices for a room at a particular hotel across different
booking platforms benefited TripAdvisor users over OTA users. Travelers could book the same hotel
room on an OTA, but it was promoted at a single price point. For example, on TripAdvisor, a user
interested in booking a particular hotel in Mexico City was offered a selection of booking options at
different price points on different sites, including OTAs and a direct supplier. A user searching for the
same hotel through an OTA or direct supplier was offered only one booking price point. However,
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TripAdvisor’s access to such granular pricing information was not unique; other metasearch engines
such as Kayak, Trivago, and Google offered the same price-comparison capabilities.
Experiences and Dining
The products in TripAdvisor’s Experiences and Dining category differed from its Hotels category
in that TripAdvisor owned the transactions for booking travel experiences and restaurant reservations.
In the Hotels segment, TripAdvisor sent users to other sites to complete their transactions.
Experiences In 2016, travelers spent $135 billion globally on travel activities, and this number
was expected to rise to $183 billion by 2020.37 Travel experiences included activities such as bus tours,
cooking classes, language lessons, spa treatments, and sporting events. TripAdvisor gained a sizeable
foothold in the market through its acquisition of Viator in 2014. Viator, one of the largest online booking
platforms for activities, offered 20,000 bookable tours and 600,000 reviews.38 Travelers could search,
read reviews, and book experiences on Viator. Dermot Halpin led the Experiences unit at TripAdvisor,
and converted its inventory from a curated set of experiences to an open supply, which meant that
TripAdvisor sought to offer as many activities, attractions, and tours as possible. Viator remained a
separate site but shared its inventory with TripAdvisor, so the same experiences could be booked on
either site. The Experiences unit had around 1,000 employees in 2019.
Unlike hotels, suppliers paid a commission for each experience booked on TripAdvisor or Viator,
and either way TripAdvisor was the merchant of record. TripAdvisor began to actively pursue
suppliers. CFO Ernst Teunissen explained TripAdvisor’s advantage: “Our pitch to a supplier is, ‘Sign
up with us and we can give you demand right away.’ TripAdvisor has so much traffic, we just need to
put bookable products in front of those eyeballs.”
The growth potential in travel activities quickly garnered attention from the industry. In 2016 and
2017, OTAs, hotels, and Airbnb started aggressively marketing activities to travelers online.39 Despite
this, around 80% of travel activities in 2018 were still booked offline, either in person, over the phone,
or through a travel agent.40 One industry analyst noted, “These tours, activities, and attractions, which
have always been there, have suddenly got a little bit of a rebrand because it is kind of the last area of
travel that has yet to be fully digitized.”41 A 2019 survey found that 64% of respondents said they
would rather spend money on their favored activities than on a nicer hotel room.42
While TripAdvisor was the largest player in the activities market, with more than 200,000
experiences in its listings, it faced competition not only from established travel players but also from
well-funded startups. Klook, an experiences booking mobile app founded in Hong Kong, had raised
$425 million since its founding in 2014, giving it a valuation of $1 billion in 2019.43 GetYourGuide, a
Berlin-based activities platform founded in 2009, had raised more than $600 million and had achieved
a unicorn valuation by 2019.b,44 Flush with VC funding, each startup could use its financial resources
to ramp up users and supply, which in turn created more demand for advertising on its platform.
Dining TripAdvisor entered the restaurant reservations business with its purchase of
LaFourchette in 2014, a restaurant booking engine similar to OpenTable. LaFourchette, also known as
TheFork, was an online restaurant reservations platform that facilitated bookings for restaurants and
incentivized users to book on its site by offering discounts and loyalty points. TheFork was a key player
in Europe and had 12,000 restaurant partners at the time of its acquisition; it had expanded to 65,000
b
A unicorn company was a privately-held company with a valuation of $1 billion or more.
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restaurants in 16 countries by 2019.45 TheFork had 170 employees when it was acquired, but, by 2019,
it had grown to 900 staffers in 16 countries.
Restaurants in TheFork’s network paid a flat fee for each reservation booked on TheFork’s website.
TheFork facilitated two million transactions a month, with each transaction representing a party dining
at a restaurant.
The global restaurant business was worth nearly $1.6 trillion in 2018.46 TripAdvisor knew that
OpenTable would be difficult if not impossible to beat in the U.S., so TheFork focused on expanding
into South America and Australia. Bertrand Jelensperger, its founder and senior vice president of
TripAdvisor’s Restaurants unit, explained the venture’s scaling efforts: “We expand supply first,
initially in the main cities where we make sure to get as much supply as possible; then, when we start
seeing traction outside the cities, we go to secondary cities; and the third step is to go everywhere. In
France, Spain, and Italy, we are in the everywhere stage.”
The Squeeze
In 2010, Google entered the consumer travel business with the launch of its hotel finder and the
purchase of flight search engine ITA, which it used to boost its flight metasearch feature.47 Google
began placing its own flight search tool above other flight search results in its organic search results,
and it continued to follow this model as it expanded into hotels.48 This meant that search results from
OTAs and metasearch engines were pushed further down the first search engine results page or even
onto the next page, which negatively impacted the free traffic from Google that OTAs and metasearch
engines had relied on to drive revenue (see Exhibit 13 for screenshot examples).49
In 2012, the two major OTAs, Expedia Group and Booking Holdings (which operated as Priceline
at the time before changing its name), purchased metasearch engines Trivago and Kayak,
respectively.50 In 2013, TripAdvisor enhanced and relaunched its own hotel metasearch functionality.51
Between 2013 and 2015, Expedia and Booking sought to expand and diversify their businesses, with
Expedia snapping up other OTAs (Travelocity and Orbitz) and vacation rental site HomeAway, while
Booking acquired restaurant reservations site OpenTable.52
In 2013, TripAdvisor created its first mobile app. Mobile apps were an advantage for companies in
some industries. Residential real estate was one example: a real estate app gave users a convenient way
to search and get information about homes while driving around a neighborhood to view properties.
The user experience from TripAdvisor’s app, however, was suboptimal, given that users had to click
out of the app to third-party sites to make a purchase. Meanwhile, app usage cannibalized
TripAdvisor’s core site revenues, because of foregone CPC dollars that it would have captured from
those same users on its websites.
To reverse this trend, TripAdvisor created Instant Book in 2014, a feature that enabled users to
complete a hotel booking through a supplier or an OTA directly on TripAdvisor’s site or app. Yet, after
convincing suppliers and OTAs to participate in Instant Book, the company failed to achieve significant
transaction volume, and, by 2017, TripAdvisor had mostly abandoned Instant Book. In hindsight,
management concluded that the consumer value proposition was insufficiently robust, because
consumers were already highly accustomed to booking directly or with OTAs, and the convenience of
having booking integrated with TripAdvisor’s site was not substantial enough to alter ingrained habits.
Instant Book represented a costly failure: to enable it, TripAdvisor had built a booking engine to
compete with the OTA’s booking engines. Teunissen said, “The leap from a review site to a booking
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site was too big a jump for consumers, and consumers were already being well served by the OTAs.
Our product was not as competitive.”
In addition, by 2016, online traveler reviews were ubiquitous across the web, eroding one of
TripAdvisor’s original sources of differentiation and advantage. Google began hosting user reviews
for travel, which it aggregated with traveler reviews from other sites across the Internet, including
TripAdvisor, and displayed them with its search results. At the same time, TripAdvisor was suffering
from diminishing returns as additional users added reviews; the value of each incremental review for
a popular property or destination was increasingly minimal. For example, if a hotel had only 100
reviews, one additional review could be valuable. But if a hotel had 10,000 reviews, one additional
review might make little difference, and represent minimal additional insight for most online users.
Around 2016, direct suppliers such as Hilton and Marriott tired of paying commissions to acquire
customers through third-party sites. They launched advertising campaigns designed to motivate
travelers to book directly on their sites by dangling incentives like extra loyalty points or frequent flyer
miles.53 As OTAs struggled to win back traffic from direct suppliers, they, in turn, pumped up TV
advertising in an effort to generate traffic directly rather than through intermediaries or search.54 OTAs
also attempted to reduce their dependence on metasearch engines, which took ad dollars from OTAs
while competing with them for search traffic from Google.55 For example, TripAdvisor might receive
CPC or display advertising revenue from Booking, while it also bid against Booking in generic keyword
search auctions on Google. Adding to the pressure on TripAdvisor, one industry report revealed that
while travel review sites were still important in travel planning, they had lost traffic share between
2018 and 2019, while destination websites and online travel agents gained traffic among aspiring
travelers and travel planners (see Exhibit 14 for data).56
As these challenges mounted, one industry observer noted, “As the online hotel booking business
gets more competitive, and with big chains pushing direct bookings, Google getting into the fray, and
Airbnb throwing its weight around, you can look for online travel agencies to continue to point their
businesses beyond hotels.”57
CoreX
In 2018, Kaufer concluded that the most effective way to battle these pressures in the market was to
reorganize the company around business units focused on the basic categories of travel activity—
flights, hotels, restaurants, experiences, and a unit to bring them all together, CoreX. Kaufer explained
the new CoreX unit to employees in an email in January 2018:
The charge for this group is nothing short of making TripAdvisor a habit and the first
place a traveler goes to when they are traveling or planning to travel. The group will
accomplish this by looking at the holistic experience of TripAdvisor through a traveler-
centered lens, tell the story of the brand and cohesive experience TripAdvisor offers
travelers, and act as the “connective tissue” for the site across all business units. The group
will be empowered to drive overall design and consumer experience, integrated brand
marketing and PR, shared functionality (content, maps, etc.), key strategic partnerships,
and innovating on new experiences to drive overall member growth and engagement at
every stage of the travel journey.
Kaufer hired Nelson, former chief commercial officer at Vox Media, as president of CoreX in
October 2018, and she quickly began working to foment a culture shift at the company. She said, “We
need to move from thinking about shoppers and clickers and only evaluating same day revenue, to
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thinking about engagement, habit, loyalty, and features that create real value that maybe someone
someday will pay for.” Customer segmentation was also increasingly important. As she pointed out,
“Trying to sell a duck tour to a business traveler is useless.”
Nelson also wanted to capitalize on the company’s underutilized assets. She said: “There are some
things for which we have underestimated the potential strengths, like trust. We still rank significantly
higher than most brands in terms of consumer trust and consumer willingness to share information.
How do we turn that into an opportunity?”
Next Steps
Kaufer believed that brand differentiation would facilitate TripAdvisor’s success in the crowded
and competitive travel space. He felt that TripAdvisor was well-equipped to help users plan a
thoughtful trip—one that a traveler wanted to make especially memorable because it encompassed not
just flights and hotel, but also activities and dining. Teunissen added:
There is some travel that is transactional, but it can also be emotional. For example, if
I were going with my family to Italy, it would be very important to me for everyone to
have a good time. That is not something you can put together in five minutes; it can take
weeks. It’s a high-touch purchase, and, if we can help with that, we can stay ahead of the
game and be valuable to the traveler.
TripAdvisor had the potential to offer more personalized trip planning experiences by connecting
like-minded travelers. Kaufer gave an example: “I like to scuba dive. If I go to Cozumel, I would love
to know not, ‘What is the best resort?’ but, ‘What is the best resort for diving?’ If we could provide
personalized ‘people like me’ recommendations, this would create a serious differentiation from
Google and the OTAs.” With this in mind, Kaufer and his executive team explored a number of options
to transform the user experience and monetize its products more effectively.
Reinvent the Core Product
Nelson laid the groundwork for reinventing TripAdvisor with a four-point plan leading up to the
diversification of TripAdvisor’s revenues. The first step was to learn more about users and, by
leveraging those insights, convert more users into members. Ultimately, Nelson wanted to segment
members into traveler personas, such as the last-minute traveler, the young family, or the well-
seasoned solo adventurer. This would allow TripAdvisor to target members with more personalized
offers and products.
The second phase of the plan would be to support existing features that helped deepen user
engagement, such as the “save” feature that allowed travelers to create a trip and save hotels,
attractions, and restaurants to the trip for planning purposes. Creating a tool tip to show how to use
the feature was a simple task that would add value to, and increase usage of, the feature.
The third step would be to create new features to drive consumer “stickiness,” or the likelihood that
a consumer would come back to the site and/or make a purchase. Nelson planned to start with half a
dozen concept areas, such as membership and loyalty programs, and build teams to focus on product
development within each area.
The last step would be to translate consumer loyalty into revenues. One idea was to introduce
micropayments for services. For example, TripAdvisor could charge a nominal fee for access to a pre-
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planned travel itinerary. Nelson said, “With nearly 500 million users, if we can get 10% of them to pay
us $5 a month, we create a $3 billion product line.”
Nelson also saw opportunities in display advertising, where revenues had been steady at around
$150 million since 2017. Creating user profiles for advertisers would also allow the company to create
more targeted advertising products. Nelson also considered placing display advertising into areas of
the site with high traffic but previously without advertising, such as forums, as well as expanding the
company’s advertising base into non-travel related categories, such as luxury goods.
Another idea for growing revenues was to establish a payment model for access to content and
services. TripAdvisor could use an approach similar to the paywall pioneered by the Wall Street Journal
and subsequently used by many other online publications, which gave users access to a limited number
of free articles each month before requiring a paid subscription. Alternatively, it could develop a
premium version of the site for paying members, similar to media streaming company Spotify or
financial news website Business Insider. It could convert completely to a paid model, requiring a
subscription for users to access any part of the site, though that was likely to represent an uphill battle
with consumers, given that the site had been free for nearly two decades. Moreover, competitors
offered most content for free. In order to justify a charge, TripAdvisor would need to differentiate itself
significantly and demonstrate superior value.
Expand the Verticals
An alternate and perhaps parallel pathway to growth was through TripAdvisor’s Dining and
Experiences units. Both verticals were focused on increasing inventory to offer the greatest selection
and choice for users. TheFork had made several acquisitions in emerging markets, most recently with
the purchase, in March 2019, of an online restaurant reservations business that operated in South
America. Jelensperger thought there also might be opportunities to expand TheFork’s B2B business
into software-as-a-service (SaaS) offerings that did not depend on traffic from TripAdvisor, such as a
platform and dashboard that would help restaurants manage their reputation and marketing budgets
online. TheFork was also running a pilot of a product called ForkPay, an app-based payment system
that would allow diners to pay for a meal in the app without using cash or a credit card. Under its
existing business model, TheFork sent each booking directly to a restaurant, but it could not track
whether or not the customer dined at the restaurant. If successful, ForkPay would allow the company
to close the loop on the transaction, and it could also offer to include loyalty points along with
payments.
Regarding Experiences, TripAdvisor had a head start on supply for activities, tours, and attractions,
but as Halpin considered how to accelerate growth he understood that one of the basic problems was
at the top of the funnel: how to build awareness of the offering. He wondered how best to exploit assets
already within the TripAdvisor portfolio to solve the problem. There were several sources of revenue
from within the Experiences segment: the largest percentage came from the Viator website, followed
by the TripAdvisor website, and the remainder from partner websites.
However, even though TripAdvisor had strong brand awareness, it was not known for booking
experiences. Attempts to brand TripAdvisor as a place to book activities might prove challenging.
Halpin noted, “the brand dollars behind TripAdvisor are diffuse because it is much better known for
hotels and trip planning.” On the other hand, the global brand recognition for TripAdvisor was very
high, and a significant portion of travelers visiting the website and app were already looking for
something to do. Viator, however, faced a different challenge. While it was successful at selling tours
and activities, it was not a very well-known brand. Competitors to Viator such as Klook and
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GetYourGuide could build their awareness and target their brands precisely towards travelers looking
for in-destination activities, and they had raised abundant venture capital to pursue these ambitions.
One way to resolve this issue was to ramp up investment in the Viator brand. Halpin said, “This
move would allow us to go head to head with Klook or GetYourGuide.” Increased investment would
also allow Viator to make experiences more app-centric, which would mitigate the threat from Google
and help offer activities to travelers during their journeys or at their destinations. But he knew that
building Viator’s brand would be costly, and that there were many compelling cases for investment
throughout TripAdvisor, which framed a host of resource allocation decisions for leadership.
Align Business Priorities
Expanding its experiences and restaurants businesses would help TripAdvisor become a
comprehensive travel resource. Kaufer also wondered if TripAdvisor could use the same resources to
position itself as an online resource for making plans when not on vacation, such as what an individual
or a family might want to do in the city where they lived on any given evening or weekend.
For the core business, focusing on providing a delightful travel planning experience for consumers
was a goal the executive team could agree on. But there were many open questions around how to
diversify risk and prioritize resources. Kaufer wondered how many of the CoreX growth initiatives the
company could realistically pursue in the upcoming year, particularly in light of resource constraints
such as the size of its engineering team. He was optimistic about the growth potential of the experiences
and restaurant verticals, but he was concerned about resource allocation across the company. He
wondered, “How fast do these new businesses need to grow if I am also starving the core business?”
Kaufer read over the talking points for the earnings call. He knew there would be questions about
TripAdvisor’s plans to increase revenues in the short term as well as its strategy for growth in the long
term. Kaufer believed deeply in the company that he had spent nearly 20 years building. Could he
convince investors that TripAdvisor would be able to capitalize further on its brand and consumer
loyalty to develop new forms of monetization? Could he convince consumers to keep visiting the site
while TripAdvisor developed new and more compelling reasons for them to use it?
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Exhibit 1 TripAdvisor Revenue by Segment (in millions, except percentages), Q1 to Q3, 2019
Q1
Q2
Q3
YTDa
Total Revenue
$376
$422
$428
$1,225
Growth % (y/y)
(1)%
254
0%
216
(0)%
38
6%
80
29%
42
(3)%
254
(7)%
211
(9)%
43
5%
125
28%
(7)%
238
(12)%
197
(14)%
41
0%
141
19%
49
(3)%
746
(6)%
624
(8)%
122
3%
346
24%
Hotels, Media & Platform
Growth % (y/y)
TripAdvisor-branded hotels
Growth % (y/y)
TripAdvisor-branded display and platform
Growth % (y/y)
Experiences & Dining
Growth % (y/y)
Otherb
43
133
Growth % (y/y)
(33)%
(32)%
(30)%
(32)%
Percent of Total Revenue
TripAdvisor-branded hotels
TripAdvisor-branded display and platform
Experiences & Dining
Other
58%
10%
21%
11%
50%
10%
30%
10%
46%
10%
33%
11%
51%
10%
28%
11%
Source: Company documents.
a
Year-to-date totals reflect data as reported for the nine months ended September 30, 2019, and are not necessarily summations
of the quarterly data.
b
“Other” consisted of the combination of Rentals, Flights, Cruises, Car Rentals, SmarterTravel, and TripAdvisor China business
units and did not constitute a reportable segment.
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Exhibit 2 TripAdvisor Income Statement, in millions, 2016-2018
2018
2017
2016
Revenue
$1,615
$1,556
$1,480
Cost and expenses
Cost of revenue
86
778
275
177
82
72
849
243
157
79
71
756
243
143
69
Selling and marketing
Technology and content
General and administrative
Depreciation
Amortization of intangible assets
Total costs and expenses
Operating income
34
32
32
1,432
183
1,432
124
1,314
166
Other income (expense)
Interest expense
(12)
2
(15)
1
(12)
(3)
Interest income and other, net
Total other income (expense), net
Income before income taxes
Provision for income taxes
Net income (loss)
(10)
173
(60)
$113
(14)
110
(129)
$(19)
(15)
151
(31)
$120
Source: Company documents.
Exhibit 3 TripAdvisor Revenue by Segment, in millions (2015-2018)
2018
2017
2016
2015
Revenue by Segment
Hotel
Non-Hotel
$1,157
458
$1,196
360
$1,190
290
$1,263
229
Total revenue
$1,615
$1,556
$1,480
$1,492
Adjusted EBITDA by Segment
Hotel
Non-Hotel
356
66
286
45
380
(28)
472
(6)
Adjusted EBITDA Margin by Segment
Hotel
Non-Hotel
31%
14%
24%
13%
32%
(10)%
37%
(3)%
Source: Company documents.
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Exhibit 4 Top Travel Websites Among U.S. Internet Users by Market Share of Visits, August 2019
Source: eMarketer, “Top Travel Websites Among U.S. Internet Users by Market Share of Visits,” https://chart-
na1.emarketer.com/230532/top-10-travel-websites-among-us-internet-users-ranked-by-market-share-of-visits-aug-
2019, accessed October 2019.
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Exhibit 5 TripAdvisor Timeline, Spinouts, and Major Acquisitions, 2000-2019
Date
Event
February 2000
April 2004
TripAdvisor founded
InterActiveCorp (IAC) acquired TripAdvisor
August 2005
February 2007
IAC spun off Expedia, including TripAdvisor, into a publicly-traded company
TripAdvisor acquired SmarterTravel, a travel deals site, and SeatGuru, an online
resource for airline seat arrangements
May 2007
Acquired Cruise Critic, a forum for cruise reviews
July 2008
Acquired FlipKey, an online vacation rental portal
June 2010
December 2011
May 2013
Acquired Holiday Lettings, the UK’s largest holiday home site
Expedia spun off TripAdvisor into an independent public company
Acquired Niumba, a Spanish vacation rental site
May 2014
Acquired LaFourchette, a restaurant booking business, and VacationHomeRentals, a
vacation rentals business
August 2014
April 2018
March 2019
Acquired Viator, a tour and attractions platform
Acquired Bokun, a platform to connect tour suppliers to TripAdvisor
Acquired Restorando, a South American restaurant bookings company
Source: Compiled by casewriter.
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Exhibit 7
Booking Holdings Income Statement, in millions except for per share data, 2016-2018
Source: Bookings Holdings 10K, p. 73, https://ir.bookingholdings.com/static-files/89094e34-8f33-4153-830f-f3db33342fa9,
accessed October 2019.
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Exhibit 8 Select Expedia Group Brands, 2019
Source: Compiled by casewriter.
Exhibit 9 Select Booking Holdings Brands, 2019
Source: Compiled by casewriter.
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Exhibit 10 Marriott International Income Statement (in millions except for per share data), 2016-2018
Source: Marriott International 2018 Annual Report, p. 46, https://marriott.gcs-web.com/static-files/b82978a6-9d28-4e38-9855-
fc4ae2cebe11, accessed October 2019.
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Exhibit 11 Examples of TripAdvisor Business Listings, 2019
Basic Listing
Enhanced Listing
Source: Company website.
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Exhibit 12 Example of TripAdvisor Sponsored Placement, 2019
Source: Company website.
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Exhibit 13 Sample Google Hotel Search, 2019
Source: Google, “Search for ‘Hotels in Moscow’,”
https://www.google.com/search?q=hotels+in+moscow&oq=hotels+in+moscow&aqs=chrome..69i57j0l5.2208j0j7&source
id=chrome&ie=UTF-8, accessed October 2019.
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Exhibit 14 Most Important Sources of Travel Information, 2019
Source: Megan Carty, “U.S. Experiential Traveler Trends 2019,” Skift, p. 9, https://research.skift.com/wp-
content/uploads/2019/03/ExperientialTraveler2019.pdf, accessed October 2019.
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5
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6
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19
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22
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TripAdvisor: An Itinerary for Growth
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Gupta and Herman, “TripAdvisor.”
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35
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26